A Interview with 180Solutions' CEO
What follows below is some of the material that ultimately got cut from my magazine piece on botnets and spyware for space considerations. Here's what I wrote about my visit to 180solutions and subsequent interviews with several company executives:
As I wander the halls of the 180solutions mother ship in Bellevue, Wash., I notice that each of the company's departments is fitted with large, wall-mounted plasma screen televisions that display graphs charting 180's daily and weekly sales and revenue numbers. The display nearest the marketing department showed that 180 pulled in more than $1 million in the past week alone serving ads to people who have its adware installed on their computers. Today's estimated revenue is slightly more than $100,000; the graph showing how much the company has actually earned so far today reads $2,966, but then again it is just after 10 a.m.
Shortly after arriving at 180, I sit down with the company's co-founder and chief executive, Keith Smith. I ask Smith about the criticism that his company's software too often ends up on PCs without the owner's knowledge or permission, and how he thinks the company's "users" view the quality of their software.
Smith says most users are happy with the product and fully understand the trade-offs involved in viewing "targeted ads" in order to get free stuff. He also claims that "very few" of the company's users have asked to have the software removed from their computers, citing recent customer surveys that found 60 to 70 percent of users of "Zango" -- the company's flagship offering -- said they were "satisfied" or "very satisfied."
Zango is marketed to "affiliates" -- Web site owners who want to earn commissions by requiring visitors to install 180's software in exchange for viewing content on those sites. According to 180's Web site, at any given time 7,500 to 10,000 Web sites distribute the company's Zango software.
Smith also denied allegations leveled by some anti-spyware activists that the company's software is marketed mainly to teenagers and children, saying women aged 25 to 40 made up nearly 60 percent of the company's user base.
"The games we offer aren't like console-based action games, which have an audience of mostly young men," Smith said. "Most of our offerings fall into the 'casual gaming' market, the kind of game you can play with one hand and half a brain."
Seated at a round table in the center of his spacious glass office, Smith explains the company's grand vision of "enabling the 'Long Tail' of the Internet."
The "Long Tail" is a catchphrase among the executives at 180; it refers to a term coined by Wired magazine writer Chris Anderson in October 2004 (and since expanded into a blog). Anderson's idea holds that the future of entertainment -- and by extension most large, successful Internet businesses -- lies not just in capturing or selling a few megahits but also in realizing the value of "the millions of niche markets at the shallow end of the bitstream."
Examples of companies achieving success by embracing the Long Tail are abundant: Netflix.com edged out Blockbuster's stranglehold on the video rental market by stocking thousands of less popular movies that Blockbuster couldn't justify keeping on its shelves. Another example -- Amazon.com -- sees more than half of its book sales coming from outside of its top 130,000 titles.
By offering a revenue stream to the "tens of thousands of small Web sites that wouldn't otherwise have a way to monetize their content, 180 is enabling the Long Tail of the Internet and building a platform where ... with a couple $100 advertising buys, these lesser-known Web sites can attract valuable traffic," Smith said.
At present, more than 90 percent of 180solutions' advertising business comes from thousands of tiny sites. According to Anderson's theory, however, companies that are only or mostly Long Tail -- those that don't cater to at least some mass market -- nearly always fail in the long run.
In his seminal article, Anderson pointed to the experience of MP3.com, which allowed anyone to "upload music files that would be available to all. The idea was the service would bypass the record labels, allowing artists to connect directly to listeners." MP3.com later went out of business, and Anderson posits that "it's in large part because it was only the long tail. ... Indeed, MP3.com got a reputation for being exactly what it was: an undifferentiated mass of mostly bad music that deserved its obscurity."
Smith said he sees few parallels between MP3.com and 180's business model, and maintains that the company is near to closing deals with several large content providers who should help even the ratio of large to small clients: "What's interesting is that if you look at really popular types of content out there on our network, many of them started out in the Long Tail and migrated to the Head.""
After a full day of meetings with at least five 180solutions executives, I am ready to head back to my hotel near the airport. It is just after 5:30 p.m. and several employees can be seen packing up their things. A final walk past the marketing department's LCD display indicates that 180 has made $96,000 serving online ads today, just shy of the $100,000 that the company's automated systems forecast earlier this morning. Still, the day is not over yet: While 180 employees may be headed for the parking lot, the company's software is still churning out ads on more than 20 million computers around the globe.
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